Services of Institutional Crypto Custody

Meta Description : Institutional adoption of crypto started in 2021 when Bitcoin price reached its all-time high.. At that time, many world giants entered the crypto space, for example, Morgan Stanley and Goldman Sachs banks opened crypto trading desks for their clients; Tesla announced a significant investment in Bitcoin.

Institutional adoption of crypto started in 2021 when Bitcoin reached its all-time high. At that time, many world giants entered the crypto space, for example, Morgan Stanley and Goldman Sachs banks opened crypto trading desks for their clients; Tesla announced a significant investment in Bitcoin; MicroStrategy continued its BTC investments.

Bitcoin is the most popular asset crypto for institutions because it holds the highest value and has many times proved its growth possibilities. Holding is the most common way for institutions to earn with crypto in the long run. When holding digital assets, it’s crucial to choose the right custody solution. In this article, we will explain the types and services of crypto custodians.

Types of Institutional Crypto Custodians

Crypto custodians are entities that provide secure storage and management of digital assets. There are various types of crypto custodians:

● Third-party custody services (Coinbase Custody, Gemini Custody). These are specialized companies that offer custody services to individuals, institutions, and businesses. The same services can be provided by centralized platforms (Kraken or WhiteBIT crypto institutional exchange custody).

● Bank custodians (Fidelity Digital Asset Services). Traditional financial companies are entering the crypto custody space, offering crypto custody and trading services. They bridge the traditional financial and crypto ecosystem.

● Self-custody includes hardware wallets (Ledger, Trezor) and software wallets (Exodus). Hardware wallets are physical devices that store private keys offline, while software wallets are apps that can be installed on computers or mobile devices.

Services Introduced in Institutional Crypto Custodians

Institutional custodian services are not limited to asset safekeeping, but they also provide tools for trading, staking, audit, escrow, insurance, reporting, etc. Let’s consider some of them:

1. Insurance. Many institutional custodians provide insurance coverage to protect clients’ assets against theft, hacking, or other forms of loss.

2. Transaction settlement. Custodians facilitate the settlement of transactions, ensuring timely and secure execution of trades. It is essential for institutional investors engaged in active trading or portfolio rebalancing.

3. Reporting and compliance. Custodians offer reporting tools to help institutions track and adjust their digital asset portfolios. Compliance features help in meeting regulatory requirements.

4. Integration with traditional finance. Some custodians, especially those associated with traditional financial institutions (e.g. Fidelity Digital Assets), aim to bridge the gap between the traditional finance sector and the crypto ecosystem.

5. Staking. Some custodians offer services related to staking, allowing clients to earn additional rewards by participating in blockchain networks. They may also facilitate yield generation through lending or other investment strategies (Coinbase institutional exchange wallet, BitGo wallet).

Institutional crypto trading is gaining momentum, with large companies joining the crypto sector. Custodian services and solutions not only allow for reliable asset storage but also provide a variety of tools for reporting, compliance, and earning.